Elon Musk is planning to build what could be the most advanced supercomputer in the United States, and he's doing it nowhere near his AI company's San Francisco headquarters.
Instead, the billionaire is making plans in Tennessee at the former Electrolux Memphis facility, multiple sources have told the Memphis Business Journal. The supercomputer project was being confirmed in a June 5 press conference held by the Greater Memphis Chamber. Sources said that the Chamber has been working to recruit the Musk operation to Memphis for months.
The multibillion-dollar supercomputer would be built by Musk's AI startup, San Francisco-based X.AI Corp., also known as xAI. Sources told the Business Journal that the project to place the xAI supercomputer in the Electrolux facility is expected to represent the largest investment, by dollar amount, in Memphis history. It is not certain how many jobs it would ultimately entail, though sources said it could be in the low to mid hundreds.
The Greater Memphis Chamber declined MBJ's request for comment on the project. A Phoenix Investors executive handling the former Electrolux property declined comment, citing a non-disclosure agreement, a standard procedure in many commercial real estate transactions.
Musk entered the artificial intelligence (AI) race when he founded xAI less than a year ago. The company announced just over a week ago that it raised $6 billion in series B funding at a $24 billion valuation.
The tech news outlet The Information reported that Musk recently told xAI investors that he intends to build the supercomputer, which he referred to as a "gigafactory of compute." He wants the AI supercomputer to be online by fall 2025, and he said that he would hold himself personally responsible for hitting that deadline.
We now know that this AI supercomputer would call Memphis home.
Musk selects former Electrolux Memphis facility for AI supercomputer
Sources confirmed to MBJ that xAI plans to renovate the former Electrolux manufacturing facility to accommodate the supercomputer operation. The 785,000-square-foot facility is located at 3231 Paul R. Lowry Rd. in Southwest Memphis near the Mississippi River. Electrolux opened it a decade ago to manufacture cooking appliances. At its peak, in 2016, it employed nearly 1,400 people. But, the company closed it in 2022 and transferred operations to a facility in Springfield, Tennessee.
Late last year, Milwaukee-based Phoenix Investors paid $35 million for the Electrolux building, which sits on a 216-acre parcel. Phoenix also bought from Electrolux a 575-acre parcel of vacant land nearby for $2.87 million. Those two properties now owned by Phoenix are separated by Nucor Steel's manufacturing facility. Sources told MBJ that xAI would serve as a tenant rather than buyer of the former Electrolux building.
This April, a building permit valued at $10.2 million was issued to Hamilton, Ohio-based industrial contractor Darana Hybrid for the "alteration of electrical and mechanical systems" at the former Electrolux.
On Saturday, June 1, at least 50 vehicles and a large charter bus were visible in the facility's parking lot. A source told MBJ that Musk was inside the building at the time.
It is expected that most of xAI's investment spend would go toward the advanced equipment and supporting infrastructure required to build and maintain the supercomputer.
Musk reportedly told investors last month that, when completed, the AI supercomputer — in the form of a unified combination of 100,000 Nvidia H100 graphics processing units — would be at least four times the size of the most powerful GPU clusters built by competitors like Meta Platforms to train its own AI models. It is thought that the Memphis supercomputer would be used to train the next iteration of xAI's Grok chatbot product, which competes with OpenAI's ChatGPT, among others.
On June 2, Musk posted on X that the xAI "100k H100 liquid-cooled training cluster will be online in a few months. Next step would probably be (about) 300k B200s with CX8 networking next summer."
An analysis of that post by tech publication Wccftech noted that, "This means that xAI is about to spend a whopping $9 billion on acquiring around 300,000 units of the B200 GPU, assuming the company is able to negotiate a price point that is at the lowest end" of Nvidia's estimate that each GPU would cost $30,000 to $40,000.
Investors named in xAI's recent round of $6 billion in Series B funding include Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Co., Saudi Arabian Prince Alwaleed bin Talal, and Kingdom Holding Co.
Musk's AI supercomputer expected to be largest investment in Memphis history, could position city as innovation hub
If Musk's supercomputer project comes to fruition, it is expected to be the largest economic development investment in city history and one of the largest in state history. The reigning largest statewide is Ford Motor Co.'s $5.6 billion BlueOval City in West Tennessee, announced in 2021.
However, xAI's Memphis supercomputer jobs count would likely pale in comparison to the 5,600 direct and thousands more indirect jobs Ford's electric vehicle campus are slated to bring. These type of supercomputers don't typically need many suppliers in close proximity to the site, unlike the case with large manufacturing operations like BlueOval City.
Memphis Mayor Paul Young told MBJ that he believes the xAI project, even without a historic jobs number, will help propel the city forward as a tech and advanced manufacturing hub.
"This really positions us to be a hub for innovation," Young told MBJ. "We think about smart-city solutions and some of the things that we're doing, from a city perspective — the camera network is one we talk about a lot. We are leaning in. I believe Memphis is going to be nationally renowned for our ability to innovate and move quickly. Ultimately, we'd love to see more — more tech, more investment in electric vehicle charging, more smart-city solutions — to really make us that hub in the South and nationally recognized for this type of forward-thinking development and growth."
One significant ramification of the xAI project revolves around the massive amounts of electricity and water needed by supercomputers to effectively run and cool the high-tech hardware. Memphis Light, Gas and Water (MLGW) president and CEO Doug McGowen told MBJ that the utility and City of Memphis have been in discussions with xAI on the infrastructure needed to handle the project.
Young told MBJ that the process to land the project was rapid and could help the city's efforts to recruit other major economic development projects.
"Being home to this supercomputer furthers our narrative around our ability to innovate and create," Young said. "Obviously, having a supercomputer that's going to be leading in cutting-edge artificial intelligence and things that are going to move the world forward in the future — and Memphis being the hub for that innovation — is an important statement. As a community, we have demonstrated that we can move swiftly to get business done. In partnership with the Greater Memphis Chamber, MLGW, the City of Memphis — we've all worked really hard and fast to execute on this important project, and I believe that we will see more projects as a result." — includes reporting by Greg Akers
